Spain Passes New Laws To Restrict Catalan Finances Ahead Of Independence Vote

With just a few weeks left until Catalonia's proposed independence referendum on October 1st, Madrid has taken new steps this morning to restrict the finances of local governing entities to "guarantee that not one euro will go toward financing illegal acts." Per Reuters:

The Spanish government said on Friday it had passed measures to increase control over how Catalonia spends its money in an effort to block the regional government from using state cash to pay for an illegal independence referendum.


“These measures are to guarantee that not one euro will go toward financing illegal acts,” Budget Minister Cristobal Montoro said following the weekly cabinet meeting.

Of course, restricting finances is just one of many steps taken by Spain over the past couple of days/weeks to thwart a potential independence vote.  While ruling out the use of the military and imposing direct rule from Madrid, as BBC notes Spain's government is doing all it can behind the scenes to prevent ballot boxes from being put out for Catalans to vote.

On Wednesday night a judge in Barcelona gave the police authorisation to shut down the website, created by the government to encourage people to vote on 1 October.


Spain's attorney general has asked prosecutors in Catalonia to interrogate all mayors whose name is the on the list of more than 700 who have signed up to participate in the referendum.


Those mayors who respond voluntarily to the summons should be arrested, the government-appointed attorney general said.


Catalonia's top court has called in local police chiefs to remind them that their duty is to report any crime they see being committed and to seize items being used for the purpose of the vote, specifically ballot boxes.


The newspaper El Mundo reported that the government may ask the courts to order that electricity be cut at polling stations if all else fails in the bid to thwart the vote.



Meanwhile, Catalonia’s governor and the mayor of its biggest city, Barcelona, have appealed to Spain’s premier and king for dialogue to resolve the increasingly bitter dispute over the planned vote.

Governor Carles Puigdemont and Mayor Ada Colau said in the letter addressed to Rajoy and also sent to King Felipe that they wanted support from the Spanish state for the referendum.


“We call for ... open and unconditional dialogue. A political dialogue, based on the legitimacy we all have, to make possible something that in a democracy is never a problem and even less a crime: listening to the voice of the people,” the officials wrote in the letter seen by Reuters.


Most of Catalonia’s 5.5 million voters want to have a say on the region’s relationship with Spain, but the independence cause has lost support in recent years and surveys now indicate less than half the population would choose full self-rule.


Colau gave a boost to the referendum campaign on Thursday with a message that the vote would go ahead in Barcelona, the region’s most populous area, without civil servants involved risking their jobs.

For those who aren't familiar with why Catalonia is seeking independence, we shared this helpful infographic earlier this morning showing how the region pays a disproportionate share of Spain's taxes, effectively subsidizing the rest of the country.

Of course, no matter how the referendum turns out, we're almost certain it will be positive for global equity markets.